China, price cuts and costs: the fuel driving Volkswagen's crisis
) finance chief Arno Antlitz warned that Europe's top carmaker had about two or three years to prepare for cut-throat competition from abroad, mainly China.
Second, Volkswagen recently cut prices for VW brand cars to counter tougher competition, a move that according to works council boss Daniela Cavallo has cost the company hundreds of millions of euros in profits. "This is one of the largest car producers in the world which is not producing large returns out of all that scale," Cole Smead, CEO of Volkswagen shareholder Smead Capital Management, said."Do I think they can sustain that level of production in a country that demands so little? It's impossible."
After all, carmakers - including the Chinese - are competing for a smaller piece of the pie: Europe's car market is 13%, or two million vehicles, smaller than before the pandemic, CFO Antlitz said. "The thinking of finding solutions through growth is gone. Everyone is losing share, and companies need to readjust," Jefferies analyst Philippe Houchois said.
Another big problem is energy and labour costs in Germany, which are among the highest in Europe and have also become a major headache for the country's chemicals and steel sectors.
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